Affiliated Foods, Inc. - Page 9

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          moneys in the promotional account could be withdrawn when                   
          petitioner rendered special event promotions, such as television            
          or radio advertising.  Colgate agreed to pay petitioner the cost            
          of performance, provided the total payment did not exceed the               
          amount in the fund for the 6-month period.  Furthermore, the                
          Colgate agreements provide that "Monies available for any one               
          promotional period must be earned by the dealer during that                 
          period."  In terms of payment, the Colgate agreements provide:              
               Payment will be made to the DEALER upon receipt of the                 
               Certificate of Performance which must indicate in the                  
               "Remarks" section the Jobber's invoice number(s) if invoiced           
               by Jobber; a copy of the applicable short term agreement               
               which indicates the number of cases shipped in support of              
               the COLGATE sponsored short term promotion(s); and                     
               documentary proof (script/story/board, tear sheet of                   
               rotogravure, and any other appropriate proof of performance            
               as may be required) satisfactory to COLGATE that the                   
               "SPECIAL EVENT" performance was rendered as required under             
               the Terms and Conditions of this agreement.  Such payments             
               may not be used to reduce, or as set off against, the sale             
               price of any COLGATE product, nor is any amount claimed to             
               be due hereunder to be deducted by the DEALER from any                 
               invoice or bill for COLGATE products.  In no event shall               
               COLGATE have any liability to make payment unless proof of             
               performance is submitted within 30 days after the                      
               termination of the performance period.                                 
               In contrast to the foregoing, most of the vendors that                 
          maintained promotional accounts with petitioner had only oral               
          agreements.  The vendors who had oral promotional account                   
          agreements used the promotional funds to pay for product                    
          advertising.  They also used the funds to make cash payments to             
          petitioner's member stores at petitioner's annual food show.                

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Last modified: May 25, 2011